A

Exclusion k. does not affect coverage for the furnace and coil. Exclusion k. excludes “property damage” to “your product” arising out of it or any part of it. “Your product” is defined, in part, as “a. Any goods or products, other than real property, manufactured, sold, handled, distributed, or disposed of by . . .” (emphasis added).

Once a furnace is installed, it becomes real property. Therefore, exclusion k. does not void coverage for either the furnace or the coil. CGL coverage should be available for the entire loss, although there may be a reason to subrogate against the furnace manufacturer.

This answer is conditional on the fact that the coil was part of the furnace and that the damage did not arise from the HVAC contractor's work. If the damage arose from, for example, a faulty weld in a connection line, the issue would be the “your work” exclusion, not the “your product” exclusion.

Editor's Note: After this question was discussed with the subscriber, the adjuster handling the claim called. He asked how far coverage extended. For example, his company normally excluded coverage for defective roofs after they were installed. However, since roofs also become real property after they are completed, he wondered whether his company had been incorrect in their coverage denials.

This is a different situation. Roofing falls within the category of “your work” for CGL purposes. “Your work” is defined as “a. Work or operations performed by you or on your behalf; and b. Materials, parts or equipment furnished in connection with such work or operation. 'Your work' includes: a. Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of 'your work'; and b. The providing of or failure to provide warnings or instructions.”

The exclusion we need to review here is exclusion l., damage to your work. This exclusion voids coverage for “property damage” to “your work” arising out of it or any part of it and included in the “products-completed operations hazard.” The exclusion does not pertain to work performed on the insured's behalf by a subcontractor.

Upon completion, the roofing work becomes a completed operation. “Property damage” to the roof, itself, arising from the work would be excluded. Therefore, if a roof leaked because of faulty installation or shingles, the resulting damage could be covered by the CGL, but the portion of the roof that leaked would not be covered. This is similar to the fact that a faulty weld in a furnace installation would be excluded because of exclusion l.